Cuba Plans New Offshore Drilling in Search for Big Oil Finds in the Gulf
By Thomas Omestad
Posted February 3, 2009
HAVANA—Cuban officials say that exploratory drilling to assess the
potential for oil reserves in the Gulf of Mexico is likely to resume in
the second quarter of this year, a sign that lower world oil prices have
not derailed efforts by the Cuban government and its foreign corporate
partners to keep moving toward offshore oil production.
Cuba believes it has major oil reserves in its waters. But the prospect
of exploratory drilling—followed by likely future commercial drilling—in
the Florida Straits has fired controversy in the United States, with the
expectation that someday, foreign oil firms could be drilling as close
as about 50 miles from parts of Florida.
The exploratory drilling will take place about 20 miles north of Havana
and will be conducted by a consortium led by the Spanish oil firm
Repsol, working with India's state-run Oil & Natural Gas Co. and
Norway's StatoilHydro. Other exploratory drilling in the portion of the
Gulf under Cuba's economic control is anticipated in 2010 and 2011.
"Cuba has high potential from an exploratory point of view," said Rafael
Tenreyro Perez, exploration manager for Cubapetroleo (Cupet), the Cuban
state oil company, in an interview. Seismic tests suggesting possible
oil deposits over the past two years in Gulf waters were "very
encouraging," he said.
Other firms that have, to varying degrees, partnered with the Cuban oil
company in the hunt for oil either on or offshore hail from Venezuela,
Malaysia, Vietnam, China, Canada, and Brazil. U.S. companies are barred
from participating under regulations flowing from the 48-year-old
American embargo of Cuba's economy. That widely criticized policy was
intended to pressure Cuba's communist government to move toward
democracy, but other countries oppose the U.S. isolation strategy toward
Cuba and do business anyway.
Foreign firms have signed exploration and production agreements for 21
of the 59 blocks Cuba has created for its Gulf waters, where the biggest
oil finds are believed to be located. An additional 23 blocks are said
to be the subject of discussions with foreign companies.
Cupet has estimated that there are 20 billion barrels of recoverable
offshore oil in Cuban waters. If that bears out, Cuba, with 11 million
people, would have reserves that come into the same range as those of
the United States.
The U.S. Geological Survey, though, has issued more conservative
estimates: under 5 billion barrels in Cuba's offshore fields.
Furthermore, most of the oil is believed to lie under deep water, where
extraction is difficult and expensive.
Some see the advent of Cuban offshore oil drilling as raising the costs
of maintaining the embargo policy, with other countries taking a piece
of the Cuban action that might otherwise fall to some American firms.
Some Capitol Hill lawmakers have urged that an exception be made in the
embargo to permit energy cooperation. Overall Cuba policy is now under
review by the Obama administration.
Others are worried that a future oil spill, given Gulf currents, could
spoil Florida beaches and shore areas. Tenreyro says that any drilling
operations will follow "the highest" international environmental standards.
Some Cuba watchers argue that environmental coordination with Cuba ought
to be one of the early results of any policy changes developed by the